Benchmarking Your Way to Profit Master Status

One thing that is critical to successfully managing a printing firm in today’s environment is to understand what drives profitability (or the lack of it) and to have action plans to improve results. Many small businesses do a pretty good job of producing financial statements, but in my experience, few really use them to the fullest advantage. Often what’s missing are meaningful benchmarks by which to judge financial results.

Do you use financial benchmarking in your firm? If so, what benchmarks do you use? Do you have an action plan to put the information to good use? Fortunately, our trade associations provide benchmarking ratio studies that can give you the tools you need. That is, if you participate in the studies and then put what you can learn from them into practice.

Printing Industries of America conducts an annual ratio study that, for the most part, is for larger commercial printers. NAPL/NAQP has been sponsoring research for more than 20 years (now called the Financial Benchmarking Study) that is more applicable to quick/small commercial firms. The call has just gone out for participation in this year’s study. If you fall into the quick/small commercial segment of the industry, I strongly encourage you to click on this link and participate. http://www.surveyadvantage.com/2012naqpbenchmarklanding.

You’ll receive a free copy of the study when you participate, and it’s available for purchase if you do not. As I said, this benchmarking information is great to have, the following are some guidelines that might be helpful to make that information more useful and actionable:

• Select the study or section of the study that provides data most similar to your firm. Selecting the size category and company profile is crucial for getting data that is meaningful for benchmarking.

• Arrange your chart of accounts so you can use your monthly and quarterly data to compare to the benchmarks of similar firms. The studies I mentioned have tabulations for “profit leaders.” In addition to your size category, this is the group against which you want to compare your business.

• If you have a board of directors/advisors, use this data when reporting company performance to that group. Also, if you do not belong to a peer group of non-competitive firms, you should join one. Such groups can be the most valuable resource in helping you improve profitability.

At Allegra Network, we have taken benchmarking to another level through our Profit Mastery Program. We have been conducting annual ratio studies since 1993 and have great data to use in growing profitability. We also run Performance Groups made of six companies of similar profile. These groups meet twice a year and update their benchmarking data and business plans before each meeting.

Performance Groups function like a board of directors on steroids. Additionally our Regional Directors, who facilitate those groups, conduct regular Profit Mastery Assessments that provide a road map for our franchise members’ business plans. The results have been dramatic in profitability growth for the centers that participate and take action on their Profit Mastery business plans.

Become a “profit master” by benchmarking your business and turning the information into an actionable business plan.

ECarl GerhardtAuthor's page
Carl Gerhardt is the chairman of Alliance Franchise Brands LLC, the parent company of Allegra Network LLC and Sign & Graphics Operations LCC, and a world leader in marketing, visual and graphics communications, linking more than 600 locations in the United States, Canada and United Kingdom. The company’s Marketing & Print Division, headquartered in Plymouth, MI, is comprised of Allegra, American Speedy Printing, Insty-Prints, Speedy Printing and Zippy Print brands of marketing, printing, mailing and Web services providers. Its Sign & Graphics Division, headquartered in Columbia, MD, is comprised of Image360, Signs By Tomorrow and Signs Now brands of sign and graphics communications providers.

Carl and his wife, Judy, owned and operated their own successful Allegra franchise for nearly 20 years before selling the $2.3 million operation in 2003. He is a PrintImage International/NAQP Honorary Lifetime Member and was inducted into NAPL’s prestigious Soderstrom Society in 2010 in recognition of his contribution to the industry.